Balance Sheet Homework Answers
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What Is Balance Sheet?
A balance sheet is a financial report which summarizes the debts, assets, and shareholder’s equity of a company at a given time. These segments provide investors with an idea about a company’s assets and debts, along with shareholder investments.
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Major Components of Balance Sheet
- Assets –
It refers to the things a company owns. They are the resources which have been acquired through transactions and hold economic value which can be measured. It also includes costs paid in advance, like prepaid advertising, prepaid insurance, prepaid legal fees, and prepaid rent.
- Liabilities –
These are the obligation of a company, meaning it’s the amount owed to creditors for previous transactions. Along with owner’s equity, debts can be a source of an asset for the company. It also includes amount amounts received in advance for services in the future.
- Owner’s/Stockholder’s Equity –
This is referred to as the book value of the company, since owner’s equity is equal to reported asset minus reported liability.
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